Carnegie among new breed of activist investors

Mark Carnegie
loves making money and he does not mind playing the attacker.

Those traits make the venture capitalist perfectly suited to his latest incarnation as a shareholder activist.

Like many of the investors he will be looking to work with, Carnegie has no time for complacent boards and under-performing companies.

In what he sees as a test case for a new type of shareholder activism in Australia, Carnegie has established a fund that will team up with disgruntled investors to give target companies a good shake-up.

Directors at underperforming companies may well be quaking in their Gucci loafers. Carnegie is well connected, has a militant streak and has something up his sleeve to convince Perpetual fund managers that he can get the job done.

It is easy to see why the cross-shareholding arrangement between
Brickworks
and
Washington H Soul Pattinson
is one of his first targets. Perpetual believes there is $1 billion in value to be unlocked by smashing the arrangement, and Carnegie will get part of that if the strategy is successful.

It won’t be easy. He follows in the footsteps of Ron Brierley, Garry Weiss and Perpetual.

Details of the game plan are being kept secret for obvious reasons but it will be a long-term strategy. The deal includes a call option that is only granted if the shares reach a certain value within two years.

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Carnegie, who turned 50 this year, has had a busy year. He has also been actively engaging in public policy debate and looking at buying more pubs with John Singleton.

More significantly, he has teamed up with former
Qantas
executives to buy a strategic stake in the airline, another company he believes is ripe for some strategic change.

He is treading down a relatively new path in Australia and sees obvious opportunities.

Shareholder activism is on the increase globally and is becoming more common in Australia, although it still lags behind the United States.

What Goldman Sachs has called “activist fundraising" has been on the increase in North America and Europe. These so-called activist funds have led major campaigns against companies in those parts of the world.

The trend is only just emerging in Australia, with the likes of Allan Gray fund manager Simon Marais having some luck in forcing services group
Spotless
to engage with a bidder.

Brickworks, Soul Patts and Qantas may only be the first of many. Carnegie, who is being advised by Watson Mangioni lawyer Robert Mangioni, points to billions lost in national income by the worst-performing companies.